On June 1, Yoon Company borrows $70,000 from First Bank on a 6-month, $70,000, 9

Question

On June 1, Yoon Company borrows $70,000 from First Bank on a 6-month, $70,000, 9% note. (a) Prepare the entry on June 1. (b) Prepare the adjusting entry on June 30. (C) Prepare the entry at maturity (December 1), assuming monthly adjusting entries have been made through November 30. (d) What was the total financing cost (interest expense)? (Round answers to 0 decimal places, e.g. 125. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) June 1 (b) June 30 (C) Dec. 1 (d) Total financing cost $ Nevin Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $18 per year. During November 2014, Nevin sells 12,000 subscriptions beginning with the December issue. Nevin prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue. (a) Prepare the entry in November for the receipt of the subscriptions. (b) Prepare the adjusting entry at December 31, 2014, to record sales revenue recognized in December 2014. (C) Prepare the adjusting entry at March 31, 2015, to record sales revenue recognized in the first quarter of 2015. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Explanation / Answer

1.

d.

The interest expense accounts for $3,150

2.

Date Account titles Debit Credit June 1 Cash 70,000    Notes Payable 70,000 June 30 Interest Expense (70,000*0.09*1/12) 525    Interest Payable 525 December 1 Notes Payable 70,000 Interest Payable (70,000*0.09*6/12) 3,150    Cash 73,150

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